Book Review: Zero to One by Peter Thiel

Recently I reviewed the book ‘Zero to One’ by PayPal founder Peter Thiel. You can watch it below.

Here’s my notes for the making of the review.

this week it’s the great book about creationism. not the book of genesis. It’s Peter Thiel’s zero to one.

This video was delayed because I actually read this book twice in two weeks.

My mind was, in fact, blown. A term I don’t use lightly, or often.

First off – who is Peter Thiel? Perhaps he is most famous as a founder of Paypal, and an investor and advisor in Facebook.

In other words, he’s bloody rich, and powerful. And a law school grad, so don’t mess with him.

So, what is Zero to One? The term itself is talking about innovation.

To do more of the same is to go from 1 to n. To create something new is to go from 0 (nothing) to 1 (something).

The best example is that globalization is to go from 1 to n. Technology is to go from 0 to 1.

Thiel, like myself, is an unabashed technologist. He puts forward a compelling argument that technological change is what will guide the future – and what fueled the dramatic change in human existence between 1770 (the steam engine) and 1970 (the computer). We need technological breakthroughs otherwise we are screwed, environmentally speaking. If China and India simply copies the American consumption model, and the american fuel model, the world is doomed.

Since 1970, apart from computers and communication, pretty much nothing has really changed (I would argue that medicine has evolved, but perhaps not gone from 0 to 1).

The book is meant not as a playbook for creating a company, but, as inspiration and an identifier of the patterns of successful, world changing, companies.

Perhaps because of his legal training (or perhaps he was drawn to legal training because of this) Peter Thiel is a contrarian. He questions the beliefs of the majority – both socially, as in the question ‘What important truth do very few people agree with you on?’ – and the conventional lessons brought about by the belief that technology companies were defined by the dotcom bubble of the late 90s.

He brings up the 4 points that most modern business guru’s talk about:

make incremental advances

Stay lean and flexible

Improve on the competition

Focus on the product, not the sales

He counters with what he believes makes a powerful, lasting company

it is better to risk boldness than triviality

a bad plan is better than no plan

Competitive markets destroy profits

Sales matter just as much as the product

These four points are at the core of the book.

Because Thiel so strongly believes that massive technological change is needed to save the planet, being meek and incremental is just not going to cut it. A different way to sell shoes online is not really an advancement.

In my mind he takes a straight shot at the likes of Eric Ries and the Lean Startup with comments like this:

“Leanness is a methodology, not a goal”

“Iteration without a bold plan won’t take you from 0 to 1″

But it is his ideas on competition and monopoly I find most interesting. Thiel believes that monopolies have a distinct advantage for not just the company, but society. And by monopolies he means Google, Apple or the days of IBM, AT&T etc. Because when a company has a monopoly they are free from the kingdom wars between rivals. They are free to invent. Competition, as defined by economists, reduces companies to faceless equals, providers of homogenous, replaceable solutions. If you are providing a homogenous solution then by definition you are not changing the world.

There is one piece of solid advice here:

The lesson for entrepreneurs is clear: if you want to create and capture lasting value, don’t build an undifferentiated commodity business.

I love the quote about the finance industry:

Finance is the only way to create money if you don’t know how to create wealth.

Thiel also argues against Globalization (as I said already about the adopting of western consumerism). Globalization means substitution – you take this job here and move it over there. It is a reshuffling of the deck, a moving of the chess pieces. Through technology though we can get complimentary advancement, not substitution.

The book is filled with valuable information. I believe that it is a business book that – true to the vision of the man behind it – is unique. Thiel is not someone who is on all these podcast shows that seem to swap guests – the very height on undifferentiated. I think Thiel is off creating a better future. This book has made me question everything about how I look at creating new businesses, and the scale at which I should be thinking. It has made me optimistic about the future, and that maybe, for some – too late for old people like me – the utopian vision of the future we had in the 1960s might happen.

This is not an operational book – I still believe that Drucker pointed the way there. But as Thiel says,

arguing over process has become a way to endlessly defer making concrete plans for a better future.

There is so much good stuff in here that I could quote it for days.

If you want to be inspired, and you want to take the high road to builder a better future, then you owe it to yourself to read this book. Many times.